USD/JPY hits fresh session peak at 112.70

Having posted a session low near 111.60 region, the USD/JPY pair regained traction and is now building on momentum back above 112.00 handle.

Currently trading around 112.65-70 region, testing daily peaks, the pair has now reversed majority of Monday's corrective slide amid resurgent US Dollar strength, following a brief consolidation in the previous two trading sessions. The prevalent risk-on mood, as depicted by recovery in European equity markets, is seen denting the Japanese Yen's safe-haven appeal and supporting the bid tone surrounding the major. 

The pair's ongoing momentum, however, runs the risk of a sudden reversal in investor sentiment amid prevalent uncertainty around OPEC output deal and the Italian constitutional referendum. 

Meanwhile, today's US economic releases that include - revised US Q3 GDP print and Consumer Confidence index, coupled with speeches from FOMC members - William Dudley and Jerome Powell, might provide fresh impetus during NA trading session. 

Technical outlook

Omkar Godbole, Editor and Analyst at FXStreet, notes, "A rounding top candle on Friday, followed by a bearish candle on Monday suggests a temporary top is in place at 113.90, although a deeper retracement appears unlikely as of now, given the 5-DMA and 10-DMA are still sloping upwards."

He further adds, "Fresh demand is anticipated on dips below the 10-DMA level of 111.46; while a daily close today above 5-DMA of 112.55 would open doors for a revisit to 114.00 levels later this week."